Problem: Points $A$, $B$, $C$ and $D$ are midpoints of the sides of the larger square.  If the larger square has area 60, what is the area of the smaller square? [asy]
pair a=(0,1),b=(1,0),c=(0,-1),d=(-1,0);
draw((-1,-1)--(-1,1)--(1,1)--(1,-1)--cycle);
draw(a--b--c--d--cycle);
label("$A$", a, N);
label("$B$", b, E);
label("$C$", c, S);
label("$D$", d, W);
[/asy]
Explanation: Divide the larger square into 8 congruent triangles, as shown, 4 of which make up the smaller square. [asy]
pair a=(0,1),b=(1,0),c=(0,-1),d=(-1,0);
draw((-1,-1)--(-1,1)--(1,1)--(1,-1)--cycle);
filldraw(a--b--c--d--cycle, lightred, black);
draw(d--b, linetype("8 8"));
draw(a--c, linetype("8 8"));
label("$A$", a, N);
label("$B$", b, E);
label("$C$", c, S);
label("$D$", d, W);
[/asy] The area of the smaller square is $\frac{4}{8}$ or $\frac{1}{2}$ of the area of the larger square, so the area of the smaller square is equal to $\boxed{30}$.